Don't dismiss KiwiSaver, advisers told
Advisers are being urged to think about KiwiSaver advice as a way to capture clients for the future.
Wednesday, October 26th 2016, 6:00AM
by Susan Edmunds
While KiwiSaver balances are growing, many advisers still regard the superannuation savings scheme as more trouble than it is worth.
Commissions range between about 0.15% and 0.25% of the client’s balance. The average balance is about $12,000.
But Richard James, chief executive of NZ Funds, said advisers could use KiwiSaver as a first step to a long-term relationship.
Advisers who worked with high income earners might find KiwiSaver was their only asset at present, but in the future that would change.
“I don’t think you should look at clients through a product lens but should look through a relationship lens,” he said.
“If you are a non-institutionally affiliated adviser it’s important to build a relationship with potential clients as early on in their wealth accumulation phase as you possibly can. It’s so much more difficult to build a relationship later on when they have already accumulated substantial wealth and have relationships in place. The banks will capture them, and independent advisers never will.”
Some advisers, such as Bill Raynel, of Investment Solutions Northland, are taking that longer-term view.
He said while he would only collect 0.2% of the balance, over hundreds of clients it would eventually add up. “It’s not a big earner. There is a lot of work involved and just as much compliance required for KiwiSaver as a large portfolio.”
But he said he made a conscious decision to focus on KiwiSaver from its start because the global financial crisis seemed to wipe out the next generation of lump sum investors coming through, who would traditionally have formed his client base.
“I saw a complete and utter lack of trust and confidence in the industry,” he said. “I didn’t know how long it would take to recover. KiwiSaver was something that people would be comfortable with. I’m using it to rebuild my client base across the age ranges instead of concentrating on older people with lump sums.”
He said if he could attract clients for a lifetime of advice, that would add longevity and value for the business over time.
Helping clients with Australian superannuation transfers had been particularly successful and was bringing in significant numbers of new clients, he said.
James said the key would be to attract the right type of client. If someone could only ever manage the minimum contribution to KiwiSaver, they might not be worth the investment. “If the client can save substantially into KiwiSaver or beyond KiwiSaver, their wealth picture is broader and more complex. Those are the clients who are absolutely worth starting that relationship with, even if it’s only around KiwISaver initially.”
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